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Unemployment Benefit Poker

July 26, 2021

A group of 21 state governors, all Republicans, have decided to do something about labor woes. This group, which could grow larger, decided to stop participating in the federal government supplemental Unemployment Benefits Program, which provides an extra $300 a week to the jobless.

The governors claim the payments disincentivized workers to return to work. Many liberals say workers aren’t returning because they’re afraid of getting COVID-19, lack adequate childcare, and/or are caring for an elderly loved one at home.

The 21 Republican governors disagree. They say small- and medium-sized businesses in their states are struggling to find workers and the extra $300 per week is the problem.

Which is it? Let’s examine the numbers.

The average American on unemployment receives $387 a week from their state. With the boost of $300 from the federal government, this number rises to $687 a week. Based on a 40-hour workweek, that means the average unemployed American is getting the equivalent of $17.17 an hour.

That is clearly more than the $15.00 hourly minimum wage progressives want. It’s also more than the average hourly earnings of around $11.50 over the last year, and more than twice the federal minimum hourly wage of $7.25.

These governors say their business-owner constituents are clamoring to end the extra $300 per week. Of course, doing so still would not bring the unemployment benefit down to the roughly $11.50 average hourly earnings rate. But business owners believe it would make it at least slightly easier to attract workers.

So, we’re seeing a real-life game of poker play out. It remains to be seen if more states will end the extra $300 per week. Regardless, the enhanced benefits are set to end in September. But they could be extended, which wouldn’t surprise me.

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